How would you cope if fraudsters made off with your house deposit? Kay Hill looks at cybercrime and how not to be a victim
When cybercrime first emerged as a threat, it was generally only the seriously gullible who fell for emailed tales of Nigerian princes, mystery inheritances and lovelorn Russian beauties. As technology has progressed, however, so has the sophistication of the fraudsters and, sometimes, it’s now impossible to tell truth from the alternative facts arriving in your inbox.
The scale of the problem is huge, admits the government-backed cyber safety initiative Get Safe Online. Official figures state that online fraudsters stole £10.9bn in the UK last year – equivalent to a £210 loss for every person in the UK over the age of 16. But that relates to crimes that were actually reported to Action Fraud, the national cybercrime and fraud reporting service. Get Safe Online’s research polls suggest that 39% of those who have been a victim of cybercrime never bother to report it, so the true loss is much greater.
Partly, this often stems from the embarrassment the victims feel. People generally don’t feel guilty if they are mugged in the street or burgled, but victims of cybercrime are often made to feel foolish, or gullible (despite the fact that, according to the Office of National Statistics, individuals in managerial and professional occupations are more likely to be a victim of this kind of fraud). In addition, unlike a mugging, or burglary, local police won’t help – all cybercrimes have to be reported instead to Action Fraud, where, it seems, only the largest multiple frauds are ever investigated and the chances of getting your money back are very small indeed.
Fraudsters are obviously seeking the maximum returns, so house purchases are like a gold mine – not only are people handling large amounts of money, but they are often extremely stressed and under time pressure, so more vulnerable to making a mistake. Add in the fact that many younger people are more confident doing business by email, than ‘old-fashioned’ methods like face-to-face or via telephone, and you have a perfect storm of risk.
The biggest threat to house buyers is known as conveyancing fraud, or deposit redirection fraud, which takes place by hackers intercepting emails between buyers and their solicitor. So, a buyer might receive a last-minute email with a change of banking details for the deposit (plausibly explained away by tales of audits and frozen accounts and backed up with the threat that any delay could make the purchase fall through). After the buyer has made the deposit, they will receive another email telling them that everything is fine (usually late on a Friday afternoon) and it will only be on Monday, when the solicitor asks them again for the deposit, that they will realise what has happened. By that time, the money has usually been withdrawn, the receiving account closed and the criminals long gone. Because either the buyer or the solicitor’s computer and email accounts have been compromised (perhaps by breaking into a Wi-Fi network), email addresses will be correct so there will be no obvious reason to be suspicious.
Action Fraud recorded 186 cases of buyer deposit redirection fraud between the beginning of 2013 and March last year, in which a total of £19,080,670 was lost to criminals, an average loss per victim of £102,584. House sellers can be victims too; in some cases, hackers have emailed solicitors asking for the purchase proceeds to be sent to a different bank account than previously notified, although in these cases, solicitor’s insurance is more likely to compensate victims.
- It’s not just during the purchase process that first time buyers are vulnerable. The poor interest rates on deposits also make desperate savers more likely to fall for
get-rich-quick scams. The Financial Conduct Authority warns of several traps for the unwary saver:
- Dodgy shares – victims are cold-called by boiler-room stockbrokers, who use high-pressure sales techniques to get people to invest in high-risk, virtually worthless penny stocks.
- Rare minerals – investors are persuaded to buy elements such as dysprosium, or graphene. They may never receive what they bought, or find that they are unable to sell it at all, let alone at a profit.
- Binary options – sold as a quick and simple investment, promising returns of up to 90%, binary options trading involves betting on whether the price of certain commodities will rise or fall over a specific time period. It is unregulated by the FCA as it is classed as gambling, and critics say that as few as 3% of investors make any profit, while three-quarters lose all their capital.
Mark Steward, Director of Enforcement at the FCA, gives the following advice, “Making a significant financial investment is an important decision, so be prudent, do your homework and be especially on guard if contacted out of the blue by someone you don’t know. No investment decision should be rushed. Be sceptical. Be suspicious. Ask questions and get answers you can verify. Remember, if you receive a call about an investment opportunity that sounds too good to be true, then it probably is.”